If you are a trustee of a bare trust in Canada, you must file a T3 Trust Income Tax and Information Return with Schedule 15 for tax years ending on or after December 31, 2026. The filing deadline is March 31, 2027. Bare trusts that hold only cash or publicly listed securities with a total fair market value under $50,000 throughout the year are exempt.
This rule was supposed to take effect years ago. It was introduced in 2023, deferred in 2024, deferred again in 2025, and finally enacted through Bill C-15 on March 26, 2026. After three years of delays, the obligation is now real, and many Canadians who do not think of themselves as trustees are caught by it.
At our firm, we have fielded hundreds of questions about bare trust reporting since the rules were first proposed. The most common reaction from clients is surprise. They did not realize that co-signing their child’s mortgage or holding an investment account on behalf of a family member created a filing obligation. This guide answers the practical questions: what is a bare trust, whether your situation requires filing, and what happens if you miss the deadline.
What Is a Bare Trust?
A bare trust exists when one person (the trustee) holds legal title to property, but another person (the beneficial owner) has the right to all the income and capital from that property and directs how it is managed. The trustee’s role is purely administrative. They hold title on paper, but the beneficial owner calls the shots.
Bare trusts are not formal arrangements with written trust deeds and lawyers. Most of them are created informally, sometimes without either party realizing a trust exists. Canadian law recognizes a bare trust whenever the legal owner and the beneficial owner of property are different people, regardless of whether anyone intended to create a trust.
Here are the situations we see most often:
A parent co-signs an adult child’s mortgage and goes on title to help them qualify. The child makes all the payments and lives in the home. The parent holds legal title but has no beneficial interest. That is a bare trust.
An adult child is added to an elderly parent’s bank account so they can pay bills and manage finances. The money belongs to the parent. The child has signing authority and legal ownership of the account, but no beneficial interest. Bare trust.
A corporation holds real estate through a nominee. The nominee is on title, but the corporation is the beneficial owner and receives all the rental income. Bare trust.
A business partner holds shares in their name on behalf of another partner, with an agreement that the real owner gets all dividends and sale proceeds. Bare trust.
In each case, the person on title (the trustee) has a filing obligation even though they may not receive any income from the property.
The Timeline: How We Got Here
The bare trust reporting requirement has one of the most convoluted legislative histories in recent Canadian tax law. Here is the sequence of events:
2018: The federal government announces plans for enhanced trust reporting as part of a transparency initiative to combat money laundering and tax evasion. The proposals target trusts that previously had no filing obligation because they earned no income.
2022 (Budget 2022): The government formally introduces enhanced reporting rules for trusts, including bare trusts, effective for tax years ending after December 30, 2023. The rules require all trusts (with limited exceptions) to file a T3 return and a new Schedule 15 disclosing beneficial ownership information.
2023: The rules technically come into effect. CRA begins accepting T3 returns with Schedule 15 for the 2023 tax year.
March 2024: Just days before the filing deadline, the CRA announces it will not require bare trusts to file for the 2023 tax year. The announcement cites the need for additional guidance and concerns about the burden on taxpayers who may not realize they have a bare trust.
2025: The government defers the requirement again. Bare trusts are exempt from filing for the 2024 and 2025 tax years while the legislation is revised.
March 26, 2026: Bill C-15 receives Royal Assent. The bill amends the bare trust definition for reporting purposes and confirms the filing requirement for tax years ending on or after December 31, 2026. It also introduces the $50,000 exemption threshold for bare trusts holding only cash or listed securities.
The 2026 tax year is the first year bare trusts are actually required to file.
Who Must File a T3 Return with Schedule 15
Any trustee of a bare trust that existed at any point during the 2026 tax year must file a T3 return with Schedule 15, unless one of the specific exemptions applies. The filing obligation rests on the trustee (the person on title), not the beneficial owner.
This means the requirement is triggered by the relationship between legal and beneficial ownership, not by whether the trust earned income. A bare trust that generates no income and involves no transactions during the year still has to file.
Here is a table of common scenarios:
| Situation | Bare Trust? | Must File? |
|---|---|---|
| Parent on title of adult child’s home (child makes all payments) | Yes | Yes |
| Spouse added to title of home owned before marriage (no formal transfer of beneficial interest) | Likely yes | Yes, unless joint spousal exemption applies |
| Adult child on parent’s bank account to help manage finances | Yes | Yes, unless under $50K exemption |
| Nominee corporation holding real estate for beneficial owner | Yes | Yes |
| Real estate held in one partner’s name on behalf of a business partnership | Yes | Yes |
| Joint bank account between spouses where both contribute and benefit | No (joint ownership, not bare trust) | No |
| Investment account held in your own name for your own benefit | No (you are both legal and beneficial owner) | No |
| Formal family trust already filing T3 returns | Not a bare trust (express trust) | Already filing |
The “maybe” cases are the ones that create the most confusion. If both spouses are on title and both genuinely share beneficial ownership, that is joint ownership, not a bare trust. But if one spouse’s name was added purely for mortgage qualification purposes and only the other spouse has beneficial interest, that arrangement is a bare trust.
When the facts are unclear, the safer approach is to file. There is no penalty for filing a T3 with Schedule 15 when it was not required. There are penalties for not filing when it was.
The $50,000 Exemption and Other Exceptions
Bill C-15 introduced a targeted exemption for small bare trusts. If the bare trust held only cash, GICs, or publicly listed securities throughout the entire tax year, and the total fair market value of those assets never exceeded $50,000 at any point during the year, no filing is required.
This exemption covers a common situation: a parent added to an adult child’s savings account holding $15,000, or a child on a parent’s GIC worth $30,000. As long as the assets stayed under $50,000 and were limited to cash or listed securities, the bare trust is exempt.
The exemption does not apply if the bare trust holds real estate at any point during the year, regardless of value. A parent on title of a $200,000 condo cannot use this exemption even if the property was sold in January and the trust held only $40,000 in cash for the rest of the year. The real estate disqualifies the trust for the entire year.
Other situations that do not require bare trust filing:
- Trusts that are already required to file a T3 return for other reasons (express trusts with a trust deed, testamentary trusts, trusts that earned income during the year)
- Mutual fund trusts, segregated fund trusts, and other regulated trusts
- Trusts that have been in existence for less than three months at the end of the tax year
- Trusts that hold assets with a total FMV under $50,000 throughout the year, provided those assets are only cash or listed securities
If you are not sure whether an exemption applies, check the specific conditions or contact our team for a quick assessment. The $50,000 threshold is based on the maximum FMV at any point during the year, not the year-end value. An account that briefly held $55,000 in March before dropping to $40,000 by December does not qualify.
How to File Schedule 15
Filing a bare trust return requires a T3 Trust Income Tax and Information Return with Schedule 15 (Beneficial Ownership Information of a Trust) attached. If the bare trust has never filed before, you will need to request a trust account number from the CRA first.
To request a trust account number, submit Form T3APP (Application for Trust Account Number) to the CRA. You can do this online through CRA’s Trust Account Registration service or by mail. Processing can take several weeks, so apply early.
Schedule 15 asks for the following information about the bare trust:
About the trust itself: Type of trust (bare trust), the date the trust was created, the fiscal period end date, and the province or territory.
About each trustee: Full legal name, address, date of birth, jurisdiction of residence, and tax identification number (SIN for individuals, BN for corporations).
About each beneficial owner: Full legal name, address, date of birth, jurisdiction of residence, tax identification number, and the type and extent of their beneficial interest.
About each settlor: The person who transferred property into the trust. For most bare trusts, this is the same as the beneficial owner.
The T3 return itself will typically show no income. In a bare trust, the beneficial owner reports all income on their own return. The T3 is filed for information purposes only, to satisfy the beneficial ownership disclosure requirement.
You file the T3 and Schedule 15 electronically through CRA-certified software. The deadline for the 2026 tax year is March 31, 2027. This is a separate deadline from the April 30 T1 deadline. Miss it and the penalties start accruing immediately. At Tohme Accounting, we prepare and file bare trust T3 returns for clients across Canada. If this is your first filing, we handle the trust account number application, the T3, and the Schedule 15 as a package.
Penalties for Not Filing
The late-filing penalty for a bare trust T3 return is $25 per day, with a minimum of $100 and a maximum of $2,500. The clock starts on April 1, 2027 (the day after the March 31 deadline) and runs until the return is filed.
For bare trusts that were required to file but did not, here is what the penalty looks like:
| Days Late | Penalty |
|---|---|
| 1-4 days | $100 (minimum) |
| 10 days | $250 |
| 30 days | $750 |
| 60 days | $1,500 |
| 100 days | $2,500 (maximum) |
The maximum regular penalty of $2,500 is reached at 100 days late. After that, no additional daily penalties accrue.
The gross negligence penalty is separate and more severe. If the CRA determines that the failure to file was made knowingly or under circumstances amounting to gross negligence, the penalty is 5% of the maximum fair market value of all property held by the trust during the year. For a bare trust holding a $600,000 home, that is a $30,000 penalty. For a $1.2 million property, $60,000.
The CRA has indicated it will focus compliance efforts on situations where the trustee knew about the obligation and chose not to file, or where the bare trust arrangement was used to conceal beneficial ownership. Accidental non-filers who come forward voluntarily and file late will likely face the standard $25-per-day penalty but not the gross negligence penalty. That said, the CRA has full discretion on this, and “I did not know” is not a defence once the rules are in force.
If you discover you have a bare trust that should have been reported, file the T3 as soon as possible. The daily penalty stops accruing the day the return is received. If you need help getting your filing sorted out quickly, reach out to our team and we can get the return prepared and submitted.
Cross-Border Implications
US citizens living in Canada who are involved in bare trust arrangements face reporting obligations on both sides of the border. The Canadian T3 and Schedule 15 filing is one part. The US side adds its own requirements.
Under US tax law, a US person who is treated as the owner of a foreign trust (which includes a Canadian bare trust) may need to file Form 3520 (Annual Return to Report Transactions with Foreign Trusts) and Form 3520-A (Annual Information Return of Foreign Trust with a US Owner). The penalties for missed Form 3520 filings start at $10,000 USD per form per year, and can reach 35% of the gross value of trust assets.
Whether a Canadian bare trust triggers US foreign trust reporting depends on the specific arrangement. If a US citizen parent is on title of a Canadian property held for the benefit of their Canadian-citizen child, the parent is the trustee of a bare trust for Canadian purposes. For US purposes, the parent may or may not be treated as having an interest in a foreign trust, depending on whether the arrangement is respected as a trust under US tax law.
The FBAR adds another layer. If a bare trust holds financial accounts (bank accounts, investment accounts) with aggregate balances exceeding $10,000 USD at any point during the year, the US-person trustee must report those accounts on FinCEN Form 114.
For multi-jurisdictional trust situations, the interaction between Canadian and US reporting requirements needs careful coordination. Our firm handles these dual-filing situations regularly, and the most important step is identifying the bare trust early, before either country’s deadline passes.
Frequently Asked Questions
What is a bare trust in Canada?
A bare trust is an arrangement where one person (the trustee) holds legal title to property for the benefit of another person (the beneficial owner). The trustee has no independent authority over the property. The beneficial owner directs all decisions and is entitled to all income and capital. Common examples include a parent on title of a child’s home, or a child on a parent’s bank account.
Do I need to report a bare trust in 2026?
If you are the trustee of a bare trust that existed during the 2026 tax year, you must file a T3 return with Schedule 15 by March 31, 2027. The main exception is for bare trusts that held only cash or listed securities with a total value under $50,000 throughout the year. Bare trusts holding real estate must file regardless of value. If you are unsure whether your situation requires filing, our team at Tohme Accounting can review the arrangement and tell you definitively. Contact us here.
Is a parent on title a bare trust?
In most cases, yes. If a parent is on the title of a property but the child makes all the payments and has full beneficial interest, the parent holds title in a bare trust for the child. The parent (as trustee) has the filing obligation. This is one of the most common bare trust situations in Canada, and it applies even when neither party intended to create a trust.
What are the penalties for not reporting a bare trust?
Late filing: $25 per day, minimum $100, maximum $2,500. Gross negligence: 5% of the maximum fair market value of the trust property during the year. For a property worth $800,000, the gross negligence penalty alone would be $40,000. The late-filing penalty stops when you file. The gross negligence penalty is assessed separately and requires a finding of knowing or reckless disregard. The fastest way to stop penalties from accruing is to get the return filed. Our team can prepare and submit a bare trust T3 on short notice if you are already past the deadline.
What is Schedule 15?
Schedule 15 is the Beneficial Ownership Information of a Trust form attached to a T3 return. It requires disclosure of the identity, address, date of birth, and tax identification number of every trustee, beneficial owner, and settlor of the trust. Its purpose is transparency: the government wants to know who actually owns and benefits from property held in trust arrangements. All trusts filing a T3, including bare trusts, must include Schedule 15. If you have a bare trust arrangement, or you are not sure whether your situation qualifies, we handle bare trust filings and trust tax returns for clients across Canada. Reach out through our contact page and we will walk you through the filing requirements.
